With the Russian army’s retreat, optimism has returned to the markets.
The Russian government does not seem to have a way out of the manpower crisis it faces. Everything depends on whether the Russian government can survive a full mobilization of the population and a declaration of war. Given that the government continues spreading the message that “all is well,” it may not be able to do that.
That raises the prospect of a negotiated settlement sooner rather than later… and a fall in energy prices.
The odds of that may be overestimated right now. But something far more important will hit today and provide some guidance on the general economic situation.
The August Consumer Price Index report should be hitting just as you are reading this and expectations are high.
Or, more literally, very low.
Investors are looking to see if inflation has peaked. The expectation is that inflation as a whole will have declined, but “core inflation,” which excludes food and energy, will be up.
If the reports are in line with what experts are suggesting, that would mean the Federal Reserve’s strategy is paying off… and they might be able to cut back some on the pain.
Credit Suisse is even expecting a major market rally.
We could be at the beginning of another positive trend… but remember that just one unexpected news event can change everything within moments.
All eyes on the CPI today and be ready to act quickly to take advantage of new opportunities.
Keep Moving,
Any strategy that makes you money consistently is worthwhile.
Though many new traders believe that trading is primarily about indicators and tools, Chris maintains that it is at least 95% about emotional control.
This is especially relevant in this bearish, choppy market which has made the trading world extremely difficult.
Learn some pro tips to come back from your losses and stay in the game.
WORD ON THE STREET
CPI To Hit, PTON Shakeup, Mixed Results From ORCL
- Fed’s Report Card Coming TODAY – The Federal Reserve has been incredibly aggressive about fighting inflation with interest rate hikes, even at the cost to the larger economy. We’ll find out whether the strategy is working when we get the CPI report today, which will show whether inflation increased last month. If inflation is higher than expected, that means that a three-quarters of a point interest rate hike later this month is likely. If it’s lower, there’s at least some possibility of just a half point hike.
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PTON Up More Than 7% – Peloton Interactive (PTON) surged yesterday after the news of a shakeup in leadership. Co-founders John Foley and Hisao Kushi are leaving the company, along with another top official. The company is struggling to shift to a new strategy that will allow more customers access to PTON’s pricey product.
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ORCL Meets On Revenue But Disappoints On Profits – Oracle (ORCL) met investor expectations on revenue, though earnings were below what many analysts’ were expecting. Still, it was a good trading day for the company, which gained both during business hours and in after-hours trading. A key highlight of the report was the completion of the deal to take over Cerner, which was finalized over the last quarter and contributed to revenue.
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Credit Suisse Turns Bullish – Analyst Jonathan Golub made a bold prediction regarding interest rates, suggesting that the Fed’s militant rhetoric could be hiding a quicker than expected reversal. He noted that inflation is declining and “really is showing in the data already.” Following a “pause” in interest rate hikes, he said, “the stock market is really going to take off.
HOT SPOTS: What’s Going on in Geopolitics
- Azerbaijan Strikes Armenia – Azerbaijani forces struck Armenia in a military operation that inflicted numerous casualties. Armenia appealed to Russia for protection, but Russia, of course, has its own problems. Still, reports last night indicate that Russia has managed to broker a cease-fire, though it’s unclear whether that will hold for long.
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Ukraine Continues Advance, Vows Total “Liberation” – Ukraine has continued its counteroffensive, which has liberated 1,100 square miles since the beginning of the month. Ambassador Oksana Markarova said that the counteroffensive will continue until all Ukrainian territory is removed from Russian control – including Crimea. “We will liberate all Ukraine, because this is what we have to do not only to restore our territorial integrity, but to save all of our people who are under occupation,” said the ambassador.
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Xi Jinping Moves To Consolidate His Political Position – Chinese President Xi Jinping is reportedly moving to fill four of the seven posts on the Central Military Commission with loyalists, safeguarding himself from growing political opposition within the Communist Party. A report from Japan indicates that Jinping’s top priority is support for his plan to take over Taiwan, even if this means an eventual military invasion.
CUTTING EDGE: What‘s Happening In Tech
- Blue Origin Rocket Fails – Jeff Bezos’s “Blue Origin” project suffered a black eye when the New Shepard booster failed soon after liftoff. The fight was unmanned and no one was injured on the ground. One bright spot – the crew capsule was able to escape the rocket successfully. So, there was no one in the thing, but if there were, they’d have been fine. “You can see how our backup safety systems kicked in today to keep our payload safe during an off-nominal situation,” said Erika Wagner of Blue Origin. Well, you have to put the best face on everything.
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Tesla Lays Out Its Five Year Plan – Head of Investor Relations for Tesla (TSLA) Martin Viecha laid out the company’s plans to a select group of investors. He argued EVs enable a “third revolution in automotive manufacturing” and explained that the company is looking to put out cheaper vehicles as part of its lineup. Supervised “Full Self-Driving” vehicles could be part of Tesla’s fleet by the end of the year – but despite the name, you still need to keep your eyes on the road.
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Starbucks Odyssey Explained – Nothing like coopting the name of one of the great epics of Western Culture for a metaverse marketing scheme. Starbucks will launch “Starbucks Odyssey” later this year, which combined its Rewards program with an NFT platform, allowing customers to earn and/or purchase digital assets. Part of this will include customers going on “journeys,” which may involve games or challenges. That sounds like too much before I get my morning caffeine.
FOR YOUR CONSIDERATION
“Many traders are permanent bulls or bears…Neither view is helpful, especially when the market is chopping around, as we’ve seen recently. Strong biases just interfere with your analysis.”
There’s no bull market. There’s no bear market. There’s just the market. Chris Hood argues that his “near-term outlook is bullish” and explains why conditions have changed.
And when the conditions have changed, winning traders change with them.
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